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A company called Addison Company bought a vehicle on January 1, 2002 that had an original...

A company called Addison Company bought a vehicle on January 1, 2002 that had an original costs of 60,000, with an estimated salvage value of 5,000 and an estimated useful life of 5 years. What is the book value as of 12-31-05 using the double-declining balance method?

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Answer #1

Annual depreciation rate as per straight line method=(100/5)=20%/year

Hence depreciation as per double decline balance method=2*Annual depreciation rate as per straight line method*Beginning value of each period

Year Beginning value Depreciation Ending value
2002 60000 (2*20%*60000)=$24000 (60000-24000)=$36000
2003 36000 (2*20%*36000)=$14400 (36000-14400)=$21600
2004 21600 (2*20%*21600)=$8640 (21600-8640)=$12960
2005 12960 (2*20%*12960)=$5184 (12960-5184)=$7776.
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